By Michelle Grattan
The mining billionaires are lining up to bend the PM's ear. Some say he's listening, but what will he actually do?
Western Australia can be challenging for Labor prime ministers. In 1974, after his government announced it would cut the superphosphate bounty, Gough Whitlam was pelted with missiles as he tried to address a Perth rally of farmers. The Age reported: ''Demonstrators crushed him against the side of a truck and tried to punch and kick him as police horses were driven into the near-hysterical crowd to his rescue. When hit by a full can of soft-drink, Mr Whitlam shouted: 'Cowards, Cowards'.''
Illustration: Dyson (after Delacroix)
Wednesday's miners' rally in Perth, which Kevin Rudd did not attend, was mild by comparison, but sent its tough message in an idiosyncratic manner. Members of Australia's rich list - Andrew Forrest (in worker's clothes), Gina Rinehart - in rabble-rousing mode was guaranteed to maximise publicity.
Rudd claims he always expected resistance to the planned tax, but when the government launched its package early last month, it would not have anticipated how vehement the push back would be. (Or, if it did, it stands condemned for not being better prepared.)
A combination of big dollars, top corporations, larger-than-life characters and exaggerated threats grabbed the debate. The improbable Clive Palmer has become TV talent. Forrest turned against his prime ministerial mate, with whom he had worked on indigenous employment, with the memorable line, ''I have said to Prime Minister Rudd, you can love a person and hate what they do.'' Miners declared they were canning projects; later they took a step back, but the initial announcements had the effect.
A diverting moment followed the intervention of one-time Labor resources minister Peter Walsh, father-in-law of WA federal MP Gary Gray. Walsh criticised the lack of earlier industry consultation, prompting Gray (whose seat, despite a 6 per cent margin, is at risk) to label Walsh an ''old warhorse'' whose comments ''sometimes . . . just bore me''.
The anti-tax campaign has taken us back to the days when the ''commies'' were the villains. Palmer dubbed Wayne Swan a communist; Forrest asked rhetorically: ''Which communist [country] is turning capitalist, and which capitalist country is turning communist?''
Of course, nothing so crude comes from BHP Billiton's suave Marius Kloppers. But his claim is breathtaking. ''It is the greatest [sovereign risk] I have seen in 17 years in this industry. I have been through two Brazilian crises and the Asian crisis, and this is by far the biggest issue I have seen by an order of magnitude,'' he told The Australian.
If you throw enough bombs, you blow something up. The government has been suffering disproportionate damage from an issue that, while important, is limited. Some of the grief is self-inflicted, as ministers realise. Trade Minister Simon Crean admitted there should have been consultation beforehand, adding, ''but it didn't take place. What we're now saying is, let's fix it.''
The fallout is coming when Rudd is weakened on various fronts - broken promises, backflips, bad administration. The broad attacks now being made against the PM on the tax and many other issues have a whiff of the Whitlam era.
The tax debate is still making it nearly impossible for Rudd to get other messages aired. This week, the PM has become more personally involved in the dealings and Kloppers was asked to go to Sydney for a tete-a-tete. BHP was surprised when the PM's office briefed the media. It shouldn't have been - Rudd has to be shown to be listening.
The Rudd camp was pleased with the WA trip, believing the PM's media appearances were positive; at the community cabinet, most questions were on other things. As for the rally, a government man says: ''Billionaires don't make good hip-pocket spokesmen.'' By yesterday, there was no sign of an immediate announcement, but the government was talking about ''meaningful consultations'' and the pressures were building for a decision soon. Meanwhile, Rudd has added $400 million from the budget's unannounced decisions to bring the tax package's infrastructure fund to $6 billion, with $2 billion for WA.
The miners' refrain is not the language of compromise: the rally chanters were demanding ''axe the tax''. The government can't credibly do that - and shouldn't. It has to judge carefully what changes to make, and the more time that passes, the trickier that becomes. It requires a fine balance between responding to the criticisms and maintaining its argument that the mining boom's proceeds should be better spread through the community.
The industry is tipping that the government could drop its proposed deduction for losses (which the miners have said they don't much want anyway), using the savings to finance an increase in the level of profit at which the tax would cut in. The government is saying there is lots of room to move in the transition arrangements to the new tax.
But the miners are already preparing to declare unsatisfactory any compromise centred mainly on raising the cut-in point. Kloppers told The Age yesterday this wouldn't address the problems of either sovereign risk or Australia's competitiveness. Sovereign risk would be a problem while the tax applied to existing projects, Kloppers said, and for Australian projects to be competitive, different rates should apply to different minerals, not the 40 per cent the government has declared sacrosanct.
Meanwhile, over in Perth, Forrest - after a chat with Rudd - again criticised the tax, but added: ''I have a Prime Minister who is listening.'' Ah yes, but the big question remains: what will he actually do?
Michelle Grattan is Age political editor.